A Minor Fix

Posted on December 13, 2007 by Russ

I recently received notice that if you attempted to access this site by going to https://taxabletalk.com you’d get an error. I’ve fixed that through the help of a friend who showed me “A” records and the like. You should be able to read this blog through either https://taxabletalk.com or https://taxabletalk.com

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States Don’t Like Trust Frund Tax Violators, Either

Posted on December 11, 2007 by Russ

I used to work in Stockton. And I know that I have at least one reader who resides there (a former co-worker). He is probably already aware of the problems that the Sang family faces.

Richard Sang, his wife Amber Lao, and their sons Brooke Sang and Richie Sang own several restaurants: Mallards in Stockton and Modesto, the Cedar Creek Inn in Palm Springs, and the Fish Market and Grill on the Lake in nearby Mission Viejo. The Stockton Mallards closed in October; the Modesto Mallards closed in November. Many restaurants fail (it’s a very tough business). However, both Mallards failed in spite of the owners allegedly pocketing payroll taxes withheld for the state.

San Joaquin County Deputy District Attorney Sudha Rajender told the Stockton Record that “[The owners] were withholding [the taxes], but they were pocketing it.” In total, the four are facing 36 counts of fraud and tax evasion. The elder Sang has been through charges like these before; he was convicted on federal charges in Washington state in 1991.

Meanwhile, California’s Employment Development Department (EDD) has already fined the owners $100,000 for not having workers compensation insurance at the Modesto Mallards. And the owners are facing a $1.6 million lawsuit over defaulted loans and owe $10,000 to Stanislaus County for unpaid property taxes.

Currently, the Mission Viejo restaurant remains open. I hope that continues (at least for the short-term); I am part of a group that has a breakfast meeting there every Friday morning. Given that Mr. Rajender told the Marin Independent Journal, “I’ve never seen a case like this before. These guys have gotten away with this for some time, and nobody has been interested in prosecuting them before. It’s very complicated.” I suspect we may soon be looking for a new location to meet.

Modesto Bee Story Here

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How To Lose In Tax Court

Posted on December 11, 2007 by Russ

Joe Kristan has a post describing the efforts of Frank Black of North Carolina. As Joe notes,

“- When he wrote checks to his college-age daughter, he deducted the amounts as ‘supplies’ and equipment purchases.

– He told the Tax Court that his six and eight-year old children worked 1,000 hours per year in his business.”

Those are just two of the examples that led to over $70,000 of civil fraud penalties. You can read more here. As Joe said, “Don’t do that stuff.”

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Property Tax Deadline Is Monday

Posted on December 10, 2007 by Russ

If you own property in California, Monday is the deadline to pay your first property tax bill. The bill must either be paid in person at your county’s tax-collector’s office or it must be postmarked by Monday. Your tax-collector may offer payments by credit card or over the Internet; you can check this by calling or looking at your county’s web site.

The second payment is due on April 10th.

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If You Want to Visit ClubFed…

Posted on December 10, 2007 by Russ

There’s a sure-fire method to get the IRS upset with you. Just withhold trust fund taxes from your employees (FICA and income tax) and don’t send them to the IRS. I can almost guarantee you that bad things will happen to you.

And if at the same time you don’t file your annual FUTA (federal unemployment tax) returns and your personal income tax returns, the IRS may want to send you to ClubFed.

Just to make sure you get some attention you can also be accused of defrauding some of your customers. And as long as you’re going this route, you might as well allegedly defraud your investors.

That’s what Marengo, Illinois contractor John M. Volpentesta is accused of. He faces 23 counts of mail fraud, wire fraud, and tax fraud. He allegedly defrauded customers investors out of over $1 million and didn’t remit federal trust fund taxes of $164,999. And, yes, it’s alleged that he didn’t file the FUTA tax returns from 2003 – 2005 and that he and his wife didn’t file three years of personal tax returns. If found guilty, Mr. Volpentesta is looking at a lengthy stay at ClubFed.

Trial will probably be next summer in Rockford, Illinois.

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Dentist Who Investigated the Income Tax Gets 33 Months

Posted on December 10, 2007 by Russ

Back in September, I noted the case of Lakeland, Florida dentist Nancy Montgomery-Ware. During her trial for tax evasion, she “figured out” that the income tax isn’t allowed under the Constitution. She also said that her husband told her she was crazy. It didn’t take long for a jury to find her guilty.

Last week was the sentencing hearing for Ms. Montgomery-Ware. She now said that it was her husband that made her commit the crime and that she didn’t want to do it. She also said that she was in an abusive relationship and her attorney asked that the judge stray from the sentencing guidelines so that she could raise her child. And she paid the full $326,000 tax bill.

Still, some time at ClubFed was in the cards. Judge James Moody sentenced Ms. Montgomery-Ware to 33 months and a $25,000 fine. She had to pay the price for committing a crime.

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Traveling Again

Posted on December 6, 2007 by Russ

I will be traveling again over the next few days, so posting will be light until next Wednesday. Should an AMT patch make it to the President, I will definitely post on that.

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Senate Passes AMT Relief, But Future of Bill Uncertain

Posted on December 6, 2007 by Russ

Late today the Senate passed a one-year Alternative Minimum Tax (AMT) patch that did not have any corresponding tax increases. The measure will now go to the House where it faces an uncertain future.

The House had passed a two-year patch that contained corresponding tax increases. As I mentioned previously, there’s no chance that an AMT patch which contains tax increases can pass the Senate nor would it be signed by President Bush. However, that doesn’t mean that House Democrats have figured that out.

Other tax measures which are scheduled to expire were removed from the AMT legislation. A separate bill on those “extenders” will soon be introduced. However, because it will contain corresponding tax increases it, too, faces an uncertain future.

Meanwhile, tax forms (which will almost certainly be wrong) are being printed at the Government Printing Office, and I and other tax professionals will have to explain to clients why the forms are wrong. As I said before, I expect that by April 15, 2008 all of my hair will be gray.

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Snipes Trial May Be Delayed Until April

Posted on December 6, 2007 by Russ

Wesley Snipes’ defense attorneys will ask next Tuesday to delay Mr. Snipes’ trial until April. The trial is currently scheduled to begin in January in Ocala, Florida. The defense attorneys, according to Ocala.com, received 1.6 million pages of material from their discovery motions and need additional time to go over the material.

This request seems a lot more reasonable than their request to move the trial to New York City because a fair jury is impossible to come by in central Florida.

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61 – 0

Posted on December 4, 2007 by Russ

That’s the score in the epic battle between Larry Harvey and Randall Preheim. Mr. Harvey has represented 61 taxpayers who resided in Antarctica and wanted to take the Foreign Earned Income Exclusion. Mr. Preheim represented the IRS.

Antarctica is still not a continent, and it’s 61 losses and counting for Mr. Harvey. Joe Kristan likens this to the battle between the Roadrunner and Wile Coyote. I liken it to the Washington Generals, who achieved an enviable record of 6 wins to 13,000 losses.

I hear the Generals are due for a win soon….

Cases: Role v. Commissioner, McDonald v. Commissioner, and Owens v. Commissioner

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